Claims, Mistakes and Official Sources
The Life Insurance Code of Practice: what insurers promise you
What the Life Insurance Code of Practice covers in Australia, the claims, underwriting and vulnerability standards, how it is monitored, and how to use it in a complaint.
The Life Insurance Code of Practice is the industry's set of service standards for life insurers, published by the Financial Services Council (FSC). Insurers that subscribe to it promise to explain policies clearly, follow standards in underwriting, handle claims within set timeframes with regular updates, give written reasons for decisions, support customers experiencing vulnerability, and handle complaints properly. The current version, Code 2.0 with later amendments, took effect from 1 July 2023. Compliance is monitored by the independent Life Code Compliance Committee. You can cite the Code when complaining to an insurer and to AFCA.
This guide is part of the claims and complaints guide. Because the Code is revised from time to time, check the current text on the FSC website before relying on a specific clause.
Who it applies to
- Life insurers that subscribe. Most retail life insurers in Australia are FSC members and subscribe. Check the insurer's PDS or website, which usually says whether it subscribes.
- Cover held through super. The Code applies to the insurer's conduct, including on group policies through super funds, for matters within its scope. Super trustees also have their own voluntary code: the Insurance in Superannuation Voluntary Code of Practice, which many funds have adopted.
- Not to general insurance (home, car, travel), which has the General Insurance Code of Practice, or private health insurance, which has its own code and ombudsman.
What the Code covers
| Area | What subscribing insurers commit to (summary) |
|---|---|
| Policy design and disclosure | Clear, plain-language documents and key facts |
| Sales | Not using high-pressure tactics; respecting cooling-off; checking direct sales are suitable for the target market |
| Underwriting | Clear questions, explaining decisions, telling you why cover was declined or loaded, reviewing exclusions and loadings on request where appropriate |
| Claims | Telling you what is needed, updating you regularly, deciding within maximum timeframes for each claim type, explaining delays, giving written reasons |
| Investigations | Limits on surveillance and on the use of medical records, a fair process for non-disclosure decisions |
| Vulnerability | Extra support for people experiencing vulnerability, including mental illness, family violence, financial hardship, language barriers and First Nations customers |
| Complaints | Internal dispute resolution meeting ASIC standards, and referral to AFCA |
| Financial hardship | Options such as premium pauses or reductions in cover |
Claims timeframes
The Code sets maximum timeframes by claim type for deciding a claim once the insurer has the information it reasonably needs, with longer allowances for complex cases such as TPD. It also requires the insurer to update you at regular intervals and to tell you if it cannot meet a timeframe and why. Check the current Code text for the exact numbers, which have been revised between versions.
Surveillance and medical records
The Code limits when insurers can use surveillance, which must be justified and conducted within set standards, and limits requests for medical information to what is relevant to the claim. If you think an investigation went too far, say so in your complaint and cite the relevant section.
How the Code is enforced
- Life Code Compliance Committee (Life CCC). An independent body that monitors subscribers' compliance, investigates alleged breaches reported by anyone, publishes reports and can impose sanctions such as corrective action or naming.
- AFCA. When deciding complaints, AFCA considers the law, industry codes and good industry practice. A Code breach can support a complaint, though AFCA decides what is fair in all the circumstances.
- ASIC. ASIC regulates the conduct of insurers under the law. The Code itself is a voluntary industry code; check the FSC and ASIC for its current status, including whether any provisions have become enforceable.
Reporting a breach to the Life CCC is separate from making a complaint. The Life CCC looks at whether the insurer met the Code; it does not award you compensation. For compensation or to overturn a decision, use the insurer's complaints process and then AFCA.
Using the Code in a complaint: an example
Illustrative: Nadia lodged an income protection claim in March. By July she had heard nothing for seven weeks, and the insurer had not said what it was waiting for.
Her complaint letter to the insurer:
- States the claim number and the timeline.
- Says the insurer did not provide updates at the intervals required, and did not explain the delay or what information it needed, citing the Code's claims section.
- Asks for a decision or a list of outstanding requirements by a specific date.
- Asks for interest or compensation for delay, if the claim is paid.
- Says she will go to AFCA if not resolved.
The insurer must respond to the complaint generally within 30 calendar days. If the response is unsatisfactory, Nadia can complain to AFCA, attaching her timeline. She can also report the Code breach to the Life CCC.
What the Code does not do
- It does not override the policy terms or the law.
- It does not apply to insurers that do not subscribe.
- It does not guarantee a claim will be paid.
- It does not give you a separate right to sue for breach; complaints go through IDR and AFCA.
Frequently asked questions
Does the Code apply to income protection in my super fund?
Generally the insurer's conduct is covered. The fund's trustee also has duties under super law and may have adopted the Insurance in Superannuation Voluntary Code of Practice.
Where can I read the Code?
On the FSC website. The Life CCC publishes reports on compliance.
Can I complain directly to the Life CCC?
You can report an alleged Code breach. It will not decide your claim or award compensation.
Sources
- Financial Services Council — the Life Insurance Code of Practice
- AFCA — complaints and how AFCA uses codes; AFCA also hosts code monitoring
- ASIC — internal dispute resolution standards and insurance conduct
- Moneysmart — insurance complaints
